Chinese dissident Xu Zhiyong at heart of a corruption storm

China correspondent for Fairfax Media

Protest: A supporter of Xu Zhiyong is detained by policemen near the court. Photo: Reuters

Beijing: Three weeks before his arrest in July last year, Xu Zhiyong began taking notes of his “talks” with Chinese police.

He knew his days as a free man were numbered. Mr Xu, a 40-year-old legal scholar and rights advocate, had already been placed under effective house arrest and round-the-clock surveillance, a common plight for Chinese activists and intellectuals perceived as a threat or nuisance by authorities.

The meetings took place in a hotel on the outskirts of Beijing, where police warned he would soon be charged, and pressured him to admit his guilt.

Xu Zhiyong. Photo: AP

“I was saddened thinking that I might not be returning home for years,” he wrote in his notes after a third and final meeting in late June.

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Mr Xu is the founder of the New Citizens Movement, a loosely-organised group that has campaigned for greater social equality and for Communist Party officials to disclose their assets to prove they are serious about tackling corruption.

Facing up to five years jail, he appeared in court this week on charges of “assembling a crowd to disrupt order in a public place”, in the most high-profile prosecution of a rights advocate since Liu Xiaobo – the pro-democracy activist found guilty of subversion in 2009, and awarded the Nobel Peace Prize the next year.

The verdict will be announced on Sunday, barely four days after the trial. His lawyer Zhang Qingfang said he had actually received the verdict notice right after the trial on Wednesday, which he said proved the trial was just theatre with a guilty verdict all but predetermined.

"Everything is pre-arranged," he said on Friday.

As Mr Xu’s trial took place behind closed doors on Wednesday, with reporters and foreign diplomats barred from attending, his calls for official transparency had particular resonance.

Secret financial records obtained by the International Consortium of Investigative Journalists revealed that more than a dozen family members of China’s political and military elite used companies registered in the offshore tax haven of the British Virgin Islands, including the brother-in-law of President Xi Jinping, the son and son-in-law of former leader Wen Jiabao, and the daughter of former premier Li Peng.

The documents, which relate to two firms which help clients register companies in offshore tax havens, show almost 22,000 clients from mainland China and Hong Kong have made use of the shadowy structures – pointing to the scale of recent wealth amassed by China’s elite, and raising questions over the potential lack of accountability in their financial and tax affairs.

And while there may be legitimate personal and business reasons for creating companies in offshore tax havens, the extensive use of such secretive entities by some senior executives of China’s biggest state-owned enterprises, including its scandal-ridden oil giants, has raised eyebrows in particular.

With numerous oil industry executives already embroiled in politically-charged corruption investigations, the ICIJ team found dozens of companies registered in the British Virgin Islands were tied to China’s biggest oil companies: Sinopec, PetroChina and CNOOC.

As it has with Mr Xu’s trial, Chinese authorities have moved aggressively to block online access to news reports exposing the secret offshore holdings of China’s elite.

A spokesman for the Chinese foreign ministry, Qin Gang, dismissed the reports, calling them “hardly convincing” and said they raised “suspicions over the motives behind it."

The revelations, however, are the latest embarrassment after a series of investigative reports published in 2012 by the New York Times and Bloomberg revealed the extensive family wealth of both Mr Xi and Mr Wen.

China’s internet and media restrictions make it difficult to gauge the broader impact of such news reports among the ordinary masses, but analysts and activists point to the increasing rise of grassroots political activism, especially online, as a clear indication of frustration at social inequality.

“Both Xu Zhiyong and Liu Xiaobo's ideas at least attempt to grapple with very real concerns in China today. One can't help but sense growing public concern over all of the big problems - including environmental degradation, official corruption, and fraying social trust - and growing cynicism over the Party's response to these problems among average Chinese,” Thomas Kellogg, the director of the Northeast Asia Program at the Open Society Foundations, said.

While those hoping the first change in Communist Party leadership in a decade would herald a more tolerant attitude toward dissenting political voices have been left disappointed, Teng Biao, a fellow activist and close friend of Mr Xu, says not all is lost.

“In some respects there has been improvement in the rights area,” Mr Teng said in a telephone interview. “But this progress has entirely not been the result of the government. It has been the result of people working non-stop and paying extremely high prices.”

For Mr Xu, the price has not just been his freedom, but also missing the birth of his child this month.

“My decision comes at a time when my child has just been born, when my family needs me most, and when I yearn to be there by their side,” he wrote in a prepared final statement he planned to read in on Wednesday. He was stopped by the presiding judge.

“Unfortunately, you regard the existence and growth of these citizens as heresy and something to fear. You say we harboured political purposes.

“Well, we do, and our political purpose is very clear, and it is a China with democracy, rule of law, freedom, justice and love.”